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Thursday, October 14, 2010

Major Yuengling expansion on the table

Just got a press release from Yuengling about the purchase of the Hardy Bottling Facility in Memphis. They are in negotiations for the purchase, and have signed a letter of intent. Here's the first paragraph:

Dick Yuengling, Jr., president and owner of D.G. Yuengling & Son, Inc., today announced the company has signed a letter of intent and is in serious discussions for the purchase of the Hardy Bottling Facility in Memphis, Tennessee, which will allow them to distribute Yuengling lager, their flagship brand and Yuengling's much sought after portfolio of brands in select new markets in the United States.

The "Hardy Bottling Facility" is the former Coors brewery in Memphis, where they made Zima at one time. Carolyn Hardy, the former plant manager, led an employee buyout of the facility in 2006. Apparently, things have not gone quite as well as they might have hoped. Unfortunate for the company, but if Yuengling does make the purchase, they have a track record of saving jobs. I don't know if the workers at Hardy are unionized or not; Yuengling took on the union workers in Tampa, and they later voted to de-certify. The release did say that no plants will be closing, and no jobs will be lost: great news.

So why did Yuengling decide to buy yet another facility, not long after expanding the newer Pottsville brewery? I thought they had capacity to spare. Apparently not:

Our three existing plants, two in Pennsylvania and one in Tampa, FL are limited in their production capabilities. In addition, the cost of freight and logistics challenges our ability to market our products at the competitive prices to our loyal consumers.

Good news for the people who've been hankering for Yuengling. The release made no promises on timing: "We can not put a specific timeline on this yet, only to say our company is working very hard to manage our growth in our usual slow and methodical manner."

Okay. What's this mean? Well, first, it means New England should finally see Yuengling, along with other parts of the country that are jonesing for an American-made, American-owned light lager beer, a beer with a real history behind it, from America's oldest brewery. Sounds hokey, but I think it's real; it's certainly worked for them in Pennsylvania.

Maybe more importantly, it puts Yuengling on the national radar. Up till now, the big boys could call it a regional brewery. Now they're going national, in their "slow and methodical manner." Will they continue to do things "the Yuengling way," feet on the street, not a lot of reliance on marketing and laptops, leaning on the beer and the story? I believe that's the way to bet.

The joker in the deck is Dick Yuengling. He's getting older, his daughters are in the business, things are good...is it time to retire? My guess is no. I think Dick wants to take his shot at a national market, and judging from how he sounded when I interviewed him last November, I think he's ready for it. I really wonder what will happen when the torch passes, and the daughters are, inevitably, offered a buyout deal from a much, much bigger brewer. Impossible to predict the result. We'll just have to wait and see.

I find it very interesting that your number one assumption is that Hardy Bottling is "not doing well". If you look further into the company you will see that most likely Yuengling saw Hardy as a strategic purchase,and Yuengling's letter of intent will most likely come with Carolyn Hardy (a minority woman) as top management. (check her track record)

Large corporations buy smaller corporations not as a favor to anyone, but because these large corporations are nervous about the capabilities. Hardy Bottling's facilities, and all current and former Coors facilities, are much larger than any brewery that Yuengling currently owns.

What most people don't realize when starting a business is that, at the the end of the day you must know when to get out.

It's a big plant, sure, but they've been looking to sell: the facility's been up for sale for a while, and there was major damage from the 2008 tornadoes.

Yuengling's not a corporation, either; it's a private company, owned by Dick Yuengling. I guarantee you, without fear of contradiction, that he's not "nervous" about the capabilities of this plant. He's running the largest American-owned brewery, his sales have grown over 400% since 1990. Yuengling bought the Stroh brewery in Tampa because it was available, they needed capacity, and the price was right. Prices are hammered flat right now, and Yuengling has cash; right time to buy.

Everything I see about Hardy in the news indicates they're not doing well. City Brewing, which also looked at that facility when Coors sold, and has the old Rolling Rock facility in Latrobe, PA, is scraping by (though getting Iron City has helped). The plant was bought for $9 million in 2006; I suspect Yuengling's going to get it for less, and they won't be interested in selling water, or any of the other products Hardy may be doing: they're going to make beer, their beer.

Okay, not to rain on anyone's parade, but I'll be the little kid who points out the emperor's new clothes...

Being in Illinois, where Ying isn't available, I've taken opportunities to try "the Lager" when possible. Can't say I'm terribly impressed. Is this another one of those brass rings like Coors and Stroh's used to be in the '70s?

With all the good beers available on the shelves these days, Yuengling will only get a passing glance from me.

Steve,Yuengling is not aimed at the craft drinker. Absolutely. However, it is aimed at the mainstream drinker, and it's been our experience in PA that once drinkers break out of the 'regular' choices, try a Yuengling and find it doesn't poison them, many -- not 'most,' or 'all,' but 'many' -- of them are more willing to try something else...which has been to the benefit of craft brewers.

Doesn't poison them, heh -- I understand the theory, Lew, But here in the midwest we've already got those kinds of beers (regionals, if you will) in the likes of Leinenkugel, Point, and even Schell. And they're all attempting their own forays into "craft" brewing, but their mainstays are pretty much in line with Yuengling.

Understanding that this whole discussion is invalid if Y isn't even headed for this area.

Far as I know, Schell is second, about 20 years younger than Yuengling, and also still family-owned. They do a more interesting range, I'd agree. But again...Yueng's not targeting you! Be interesting to see how the Midwest works out for them. REALLY curious to see if they have the balls to go into Missouri!

Hey Steven, Unlike Coors and Strohs, Yuengling makes a very good and popular porter and ale and have done so for decades and back when there were very few available.

The lager is not coors, or strohs, or anything they made. It's actually got malt and is a great choice for certain bars that have little on tap, or who think stella artois or blue moon is craft beer. People like it. Might not be your thing but there's plenty of other choices.

Couple caveats: the Porter and Lord Chesterfield Ale are lager-brewed. None of the beers are all-malt...which brings up one of my favorite Yuengling stories. I was talking to former brewmaster Ray Norbert, who held that position for almost 30 years, back in 1994. After a great interview, I got a little feisty, and asked him if he'd ever considered doing an all-malt beer. He looked at me with gentle wonder, and asked: "I'm running two shifts, 6 days a week; we just put in a major expansion that doubled my capacity, and the sales force is still selling more beer than I can make. Tell me: what's broken that I need to fix?" And that's how it's been ever since. If the growth ever slows down significantly, it might be time to reconsider!

Have 1st hand knowledge of Hardy Bottling and the plant Yuengling is planning to purchase.

First the plant would be a good strategic purchase. It is a large facility that had major upgrades by Coors prior to Molson shuttering it. It sits next a major railroad intermodal site and has rail lines linking to this intermodal yard. This give them very cost effective delivery mechanism to the the Midwest.

Hardy Bottling is a boutique bottler that focuses mainly on soft drinks. They do not brew beer. The company has been in trouble for a while. They lost a number of significant customers due to quality and performance issues. For this reason they are bleeding cash.

A few years ago, I found a shard of glass wedged into the pull tab of a can of Yuengling Light I had bought.

Not being able to find contact info online, I sent a letter, the old fashioned way to Yuengling, including the lot number from the case and the shard of glass. I told them I'm not litigous, just a concerned beer drinker and thought they should know that something went awry with this case of beer.

I lived for 10 years in Scandinavia and Yuengling is the only mass produced US beer I can drink.

Much to my surprise - a few weeks later, I got a package in the mail with all sorts of Yuengling goodies, and a HANDWRITTEN letter from Dick Yuengling apologizing about the shard of glass....

Could you imagine that attention to customer service from a faceless mega brewery?

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All opinions expressed on this blog are strictly my own; they do not reflect those of the publications for which I work.
I've been a full-time drinks writer since 1996. Currently I'm managing editor of Whisky Advocate magazine, and my first whiskey book, "Tasting Whiskey," came out in October 2014. I am the author of four regional brewery guidebooks. Next time you see me at a bar or event or distillery, say hi.